Towards a lean, sophisticated manufacturing future

David Armston, Secretary of The Manufacturing & Engineering Institute of Australia

Times are hard for the Australian manufacturing sector. So hard, some say, that the sector is dying.

“Manufacturing in Australia is not dying,” David Armston, Secretary of The Manufacturing & Engineering Institute of Australia (MEIA) told Ferret.com.au. “What’s happened is the volume bottom end of the market, the commodities stuff has largely gone to Asia because it is cheaper.”

As a result, Armston explains, smart Australian manufacturers need to concentrate on supplying more precision components. In other words, the survivors will be those who produce added valued, differentiated items.

Businesses who follow this path “are actually buying themselves a future by being in specialist niche markets rather than volume markets because...the volume markets have allmostly gone to the cheaper Asian operators.”

Securing the future of Australian manufacturing, or more specifically Australian metals manufacturing, is what MEIA was set up to do. The organisation aims to fill the gap between the larger, established industry associations and smaller (SME) metal manufacturers. It acts to help those SMEs find their way to value-added niche markets and help them to survive and prosper.

As a bridge between SMEs and the broader industry, MEIA helps share new ideas and the latest technologies to everybody in the industry. It aims to improve the work practices of businesses and the skill sets of their workers.

Skills and Training

Armston says that skills and training are two of MEIA’s major focus areas. Indeed, TAFE and Manufacturing Skills Australia are represented on the organisation’s board.

Within ‘Skills and Training’, he identifies four key issues that need to be addressed if Aussie metal manufacturers are to survive.

The first issue is the skills shortage. This may be a bit of a no-brainer to anybody closely associated with the sector, but a look at the figures sheds light on the extent of the problem.

The six monthly Skill Shortages, New South Wales report, published in 2012 by the Department of Education, Employment and Workplace Relations provides information about the NSW labour market and reports on the results of its ongoing skill shortage research.

According to the report, in 2102 64 per cent of occupations in the technical and trades category had a skills shortage. This was an improvement on the 2011 figure of 77 per cent, but was still very high.

The second issue of concern to MEIA flows on from the skills shortage. Australia doesn’t just have a skills shortage. We also have an issue with skills mix.

“We need to help SMEs think about the skill mix they need for the future. For their businesses to survive and prosper we’ve got to help them work out what skill mix they need,” Armston says.

“This means they have to understand what’s happening in technology, what’s happening in education, what’s happening in the general industry trends.... younger workforce.... older workforce....this sort of stuff.”

The third key issue is training funding.

According to Armston, in every state, governments are looking at the TAFE sector and working out how to fund it into the future.

This is proving a difficult task and at the moment “... for both TAFE and the private sector registered training organisations there’s a lot up in the air in terms of funding.”

“We believe one of our roles is to make it easier for SMEs to understand what the options are in terms of funding their training.”

The fourth and final issue is how to deal with red tape.

Armston explains that, when it comes to training, there a lot of options. And with various organisations offering them training packages, many SMEs find it difficult to separate the wheat from the chaff.

As he puts it - “A lot of the smaller companies are saying it’s all too hard to understand what is available and what isn’t, both from the government sector and from the private sector.”

How can MEIA help?

“We are trying to provide a clear path to SMEs so they know how to go about upgrading the skills of their organisations now and in the future,” says Armston.

Without such a path, he says, many businesses find the whole issue of training too confusing and too daunting. So they don’t bother.

Step one on the path is letting businesses know where the work is. SMEs need to look to the future and consider technology trends like 3D Printing, CAD and so forth.

In Australia the number of people employed in the manufacturing sector has halved in the last 10 years. As painful as this shift has been, it was always going to happen. The maths is simple. This country can’t compete with Asia at the high volume end of the market.

So the manufacturers who succeed are going to be the ones who find themselves the right markets and equip themselves with the necessary physical capital to succeed.

And they will also need to have the human capital to succeed. This involves apprenticeships and technical training. And, increasingly, it involves workers with graduate skills. MEIA can also inform businesses about such issues.

As Armston puts it - “Human capital means that you actually have to think about what are the skill needs of your business for the next five years and what sort of people do you need.

“Do you need to upgrade the skills of the people? Do you need to replace the older workers who are going to retire? What sort of apprentices or graduates do you need?”

“It’s about trying to help people plan and deliver a successful business.”

MEIA Forums

To get this information out there, MEIA is offering a series of Forums and Seminars.

Commenting on the forums, Armston says, “People will be encouraged to bring not only themselves but their boss and their key people. So that’s the model and it’s worked well in a lot of industry associations and institutes I’ve worked with. There are good models and ways to do this.”

The first, to be held on August 29 at Miller TAFE in south-western Sydney, will incorporate a regional World Skills competition for apprentices and a manufacturing and engineering suppliers EXPO and Seminars.

The importance of skills and training to MEIA is reflected by the fact that three of the papers to be delivered on the day focus on the topic.

Manufacturing Skills Australia will address the topic of the future direction of funding for qualifications in manufacturing and engineering; Australian Industry Group will give a paper regarding policy influences, services and working with MEIA; and state and federal government representatives will address the issue of government support.

From there, the forums are to become quarterly events with the aim of keeping everybody in the industry informed and up-to date with the latest information.

As Armston puts it, “We’ve got to provide value, we’ve got to provide forums, we’ve got to provide knowledge and information - so they get knowledge transfer, business improvement.....and they also get an industry social life. If they’re interested in the first two, the third comes automatically.”

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